Service Offerings for Out-Sourcing Client Trust Companies
M&K will serve foreign and domestic trust companies wishing to outsource both critical and non-critical functions. Potential services can include all or any combination of five levels:
- Level One: Assist in the formation and application/chartering process as an “Organizer” (primarily for New Hampshire-chartered FFSCs).
- Level Two: Provide a leasehold and ancillary services to meet New Hampshire’s statutory situs requirements.
- Level Three: Provide one or more resident New Hampshire directors to meet New Hampshire’s statutory requirements.
- Level Four: Provide ongoing liaison assistance with New Hampshire’s Banking Commission and regulatory environment generally.
- Level Five: When needed or appropriate, provide officers and/or administrative assistants to help establish New Hampshire as the exclusive state income tax situs for possible state tax savings or other New Hampshire trust benefits.
A minimum monthly fee applies for any level of service. Additional charges will be quoted individually, based on the choices made from the following menu of specific service offerings:
I. Level One: Organization and Chartering.
A. Chartering Process. M&K will provide services as an Organizer during the process of obtaining a New Hampshire trust company charter. A monthly fee applies for this service.
B. Policy and Procedure Manuals. M&K will assist with the preparation of policy and procedures manual. The cost will depend on the complexity of the client’s structure and the time and labor required.
II. Level Two: Establishing and Maintaining the Required
Physical Presence in New Hampshire.
These services will enable the client to meet New Hampshire’s statutory infrastructure requirements by providing workspace to the client. This workspace will include: a shared or separate office; conference room access; document storage space; necessary wiring conduits to accommodate electrical and computer needs; assistance with the logistics of phone hookup, computer wiring, office furnishings, file cabinets, etc.; answering the client-dedicated phone line; limited mail forwarding; and signage in the client’s name stenciled on the front glass doorway. The monthly fee for these services depends on whether the client requests a shared or separate office. The client will be responsible for all out-of-pocket costs associated with preparing and operating the workspace.
III. Level Three: Providing Required New Hampshire Representation on the Board of Directors and Committees; D&O and E&O Coverage.
A. If necessary (i.e., for a New Hampshire-chartered FFSC), M&K personnel will be available to serve on the client’s Board of Directors for a monthly fee. The actual cost will depend on the time involved. Additional charges apply for each additional director or committee member and for minute taking.
B. The client is responsible for securing and paying for acceptable D&O and E&O coverage for each M&K board member, expressed either in a letter agreement or as part of an overall service agreement setting forth all services that may be provided.
IV. Level Four: New Hampshire Regulatory Liaison and “Corporate” Compliance.
M&K will provide a compliance staff officer who will provide: ongoing input and assistance on regulatory interactions; liaison services between New Hampshire bank examiners and the client, particularly in advance of audit; maintenance of the client’s trust company books and records in a manner complying with New Hampshire law, and preparation of periodic reports that may be required by the Banking Commission and federal government.
A minimum monthly fee applies for these services. The actual cost will depend on the time and labor involved in any particular engagement.
V. Level Five: “Trust Agent”.
A. M&K’s trust officers will be agents for the administration of the client’s trusts (i.e., “Trust Agent”), to help secure any available state tax savings; take advantage of opportunities regarding dynasty trusts, the New Hampshire self settled trust statute (as of January 1, 2009), “directed trusts”, etc.; and other administrative efficiencies. Pricing for this component will depend entirely on the level of the Trust Agent’s services in any particular case, and likely would be more in line with custody versus trustee rates (5-20 bps) because M&K personnel would serve in an agency capacity to the client, rather than as a full fiduciary. The fee in any given case will depend on various factors, including the number and complexity of the client’s accounts.
B. Possible Level Five duties:
- Learning and working with the client’s trust accounting system or utilizing M&K’s contracted system
- Filing
- Telephone duties
- Attend the client Trust Committee meetings, and prepare and distribute minutes
- Check writing (including the preparation of discretionary action request forms, bill paying, etc.)
- Overnight packaging and other mail forwarding responsibilities, including service of process agent, if necessary
- Preparation of administrative annual reviews
- Distribution of quarterly statements
- Limited liaison with New Hampshire’s Banking Commission
- Expertise and assistance in preparing for and enduring state regulatory examination
- Other traditional “Administrative Trust Officer” duties, as needed
M&K will not provide investment management services for its clients (although we are in a good position to make referrals, if the client has no relationship or wishes to make a change). The intent will be to offer flexibility, allowing client trust companies the opportunity to continue their relationships with their existing investment managers while M&K personnel strive to be the best administrators possible. To make all relationships efficient (as is the case when individual M&K attorneys act in a trusteeship capacity), M&K will encourage clients to retain their pre-existing custody and clearing relationships. This means that M&K’s default custodian (Bank of New York or Northern Trust) will seldom be utilized.
1.Copyright © 2008 by McDonald & Kanyuk, PLLC. All rights reserved.
2. These trust companies include New Hampshire family fiduciary service companies (“FFSCs”), non-New Hampshire chartered trust companies (depository and non-depository) branching into New Hampshire, and non-FFSC New Hampshire-domiciled trust companies.
